Perspectives on where our world is heading from a vantage point in Denver, Colorado.

13 March 2008

Employee Arbitration Gone Amok

As this Op-Ed in the Los Angeles Times explains, there is a problem with employer-employee arbitration in many case. Such as this one:

A young American woman already denied the right to criminal justice in Iraq was insulted for a second time when a judge denied her the right to sue for civil relief in a U.S. court.

What was the reason? There was a binding arbitration clause in her employment contract. The judge said: "Sadly, sexual harassment, up to and including sexual assault, is a reality in today's workplace." He then sent the case to binding arbitration as requested by Halliburton and its former subsidiary, KBR, snuffing out the civil case of their employee, a mother of five who had filed a lawsuit alleging sexual harassment and assault by co-workers while on the job in Iraq.

A second woman is likely to face the same fate in the same court, in a case alleging that she was drugged and brutally gang-raped by co-workers in Iraq and then held incommunicado, without food or water, in a shipping container by the same employer. In an unbelievable statement to the Equal Employment Opportunity Commission, KBR said that after a medical examination, the woman was "taken to a secure unlisted living container where she could rest." It is hard to imagine any greater trauma to an already traumatized and injured rape victim than terrifying and forcible isolation immediately after the violent event. Adding insult to injury, the rape kit used by a military doctor in examining the victim was reportedly handed over to Halliburton/KBR, and doctor's notes and photos of her bruises are missing.

There was no criminal prosecution of the alleged perpetrators because they worked for a defense contractor, which is exempt from criminal sanctions under an order enacted by the Coalition Provisional Authority in Iraq during L. Paul Bremer III's tenure as its administrator.

The bigger issue:

This is a preview of the demise of the jury system . . . "Tort reform" is a deliberately deceptive term coined in the 1980s by tobacco, pharmaceutical, insurance and gun lobbyists and lawyers who set about to transform our civil justice landscape by eliminating corporate exposure to civil liabilities. . . . the courthouse doors are rapidly being closed to average citizens, who will be shunted off into a lucrative private legal system presided over by retired judges employed by alternative dispute-resolution providers.

Many Americans would be surprised to learn they are barred from pursuing a case in court because of boilerplate binding arbitration clauses buried in forms they signed with banks, real estate and escrow companies, auto dealerships, medical care providers (including hospitals) and many other people and entities that may have caused them harm. Yet that's often the case (and what happened to the two Halliburton employees would have been the same, even if they'd been in Wisconsin rather than Iraq). . . .

In such arbitration proceedings, there is no public or media access, no rules of evidence or procedure, no court transcript, no jury and, most important, no appeal -- no matter what. Quite simply, there is no accountability in binding arbitration, in which the arbitrators and alternative dispute-resolution providers are paid by the corporate defendants -- who are also likely to guarantee repeat business.

Binding arbitration clauses were drafted and put into form contracts by lawyers for the corporations that stood to benefit from them the most.

The Iraq War immunity from criminal liability for government contractors was eggregious.

Pre-dispute arbitration claues with consumers and in individual employee-employer situations should be banned. Short of that, there ought to, at least, be an exception for intentional torts, almost all of which are also crimes, like the one in this case.

There is a public interest in having dispute resolutions that are both actually fair and perceived to be fair, something that is no longer true in the case of consumer and individual employee arbitrations. There is a public interest in not creating an environment where one employee has the power to rape another with impunity. There is a public interest in discouraging government contractor cover ups. There is a public interest in knowing what justice has been meted out.